Parliament watch: FTA exports rise, PLI payouts grow
The government informed Parliament that India's merchandise exports to countries with which it has Free Trade Agreements (FTAs) rose to $43.14 billion in the April-June quarter of FY27, a 25% year-on-year increase, raising FTA partners' share of India's total merchandise exports to 33.4% for the quarter. [Unverified — quarterly figure]
For the full year FY26, FTA-partner countries accounted for $179.1 billion of India's merchandise exports, or 40.5% of the total, according to the Ministry of Commerce and Industry's written reply to the Rajya Sabha.
Separately, the government also reported that ₹35,354 crore has been disbursed under Production Linked Incentive (PLI) schemes till March 31, 2026, with the programme driving over ₹2.4 lakh crore in investment, ₹22.66 lakh crore in cumulative production and sales, ₹15.2 lakh crore in exports, and over 14.15 lakh jobs across 14 sectors.
India has signed five FTAs in the past five years and is negotiating several more, as part of a broader push to diversify export markets.
India's Free Trade Agreement (FTA) Architecture
An FTA eliminates or substantially reduces tariffs on goods traded between signatory countries, while a Comprehensive Economic Partnership Agreement (CEPA) or Comprehensive Economic Cooperation Agreement (CECA) goes further, covering services, investment, and intellectual property alongside goods. India currently has seven major trade agreements in force covering 19 countries: the India-ASEAN FTA (goods since 2010, services/investment since 2014, covering 10 ASEAN members), the India-Japan CEPA, the India-Korea CEPA, the India-UAE CEPA (in force since May 2022), the India-Australia Economic Cooperation and Trade Agreement (ECTA, signed December 2022), and the India-EFTA Trade and Economic Partnership Agreement (TEPA, covering Switzerland, Norway, Iceland, and Liechtenstein), which includes a landmark USD 100 billion investment commitment over 15 years.
Key Details
- FTA partners accounted for 40.5% of India's total merchandise exports in FY26 ($179.1 billion), a share that has risen steadily from around 22.4% in FY21 to 28.7% in FY25 before this jump.
- India has signed five FTAs in the last five years, with negotiations ongoing for agreements including with the UK and the EU.
- CEPAs/CECAs are typically used for more comprehensive partnerships (e.g., UAE, Japan, Korea), while ECTA/TEPA-style pacts emphasise investment commitments alongside trade (Australia, EFTA).
The reported rise in FTA-partner export share reflects the cumulative effect of India's FTA-signing spree over the past five years — each new or deepening agreement incrementally shifts export destination patterns toward partner markets with preferential tariff access.
Rules of Origin (RoO) — The Gatekeeping Mechanism of FTAs
Rules of Origin determine whether a good qualifies for preferential tariff treatment under an FTA, based on where it was substantially manufactured or transformed, preventing "third-country" goods from being routed through an FTA partner merely to dodge tariffs. India tightened its RoO verification through the CAROTAR (Customs (Administration of Rules of Origin under Trade Agreements)) Rules, 2020, which require importers claiming preferential duty to possess and furnish origin-related information proactively.
Key Details
- Most of India's older FTAs (ASEAN, Korea CEPA) rely on a single or dual proof-of-origin mechanism, typically a certificate from a designated authority in the exporting country.
- The India-EFTA TEPA introduced more flexible RoO features — multiple proof-of-origin options including self-declaration, diagonal cumulation across member countries, and time-bound verification service-level agreements — reflecting a more trade-facilitative design in India's newer agreements.
- CAROTAR, 2020 applies importer-side scrutiny in India to guard against origin-manipulation and tariff circumvention regardless of which FTA is invoked.
As India's FTA-partner export share grows, the integrity of Rules of Origin becomes increasingly important — it is the legal mechanism ensuring that the preferential access driving this export growth is only availed by goods genuinely originating in FTA-partner countries.
PLI Scheme — Brief Context
The Production Linked Incentive scheme (launched 2020, 14 sectors, ~₹1.97 lakh crore outlay) pays incentives on incremental sales of domestically manufactured goods. Its reported cumulative impact — ₹15.2 lakh crore in exports and ₹2.4 lakh crore in investment — is a separate but complementary lever to FTAs: while FTAs open preferential market access abroad, PLI aims to build the domestic manufacturing capacity that can supply those very export markets competitively.
The same Parliament session that reported rising FTA-driven exports also reported PLI's export contribution, underscoring a two-pronged trade strategy — market access via FTAs, and manufacturing competitiveness via PLI.
- FTA-partner exports (Q1 FY27, April-June 2026): $43.14 billion, up 25% year-on-year, 33.4% of total merchandise exports. [Unverified — quarterly figure]
- FTA-partner exports (full year FY26): $179.1 billion, 40.5% of total merchandise exports (Ministry of Commerce and Industry, Rajya Sabha reply).
- India's FTA-partner export share has risen from about 22.4% (FY21) to 28.7% (FY25) to over 40% (FY26).
- India has signed 5 FTAs in the past 5 years; 7 major trade agreements in force covering 19 countries (ASEAN-10, Japan, Korea, UAE, Australia, EFTA-4).
- Rules of Origin governed by CAROTAR Rules, 2020, for preferential duty claims under any FTA.
- PLI disbursement till March 2026: ₹35,354 crore; cumulative investment ₹2.4 lakh crore, production/sales ₹22.66 lakh crore, exports ₹15.2 lakh crore, jobs over 14.15 lakh, across 14 sectors.